Tan Sri Dato’ David Chiu – Far East Consortium & Australia

Far East

Tan Sri Dato’ David Chiu, Far East Consortium & Australia

Far East Consortium senior executives, Tan Sri Dato’ David Chiu (shown left of photo) and Chris Hoong (shown right)  speak frankly to The Asian Executive on a range of pertinent issues of the day.

Far East Consortium (FEC) is the Hong Kong-based publicly listed company behind some
of the most ambitious, high profile residential projects in Australia. The company recorded an estimated global gross revenue up to March 2020 of approx. AUD$0.26 billion on total assets in the same accounting period of AUD$1.92 billion. The company
was founded in the early seventies by the venerated Chiu family who originated from Shanghai. Its key areas of business activity over time diversified to property
development, hotel operations and management, car park operations and facilities management, gaming operations and various other significant activities.

Australia is an essential focus of investment for FEC. Its flagship projects strategically located across Melbourne, Brisbane, Perth and the Gold Coast ranks Australia second
at 17% behind its global headquarters of Hong Kong at 38% in terms of the distribution of global assets. The Asian Executive interviews Tan Sri Dato’ David Chiu who is an Executive Director, Chairman and Chief Executive Officer and Mr Chris Hoong, an Executive
Director and Managing Director of Far Ear Consortium International Limited (FECIL).

TAE: Far East Consortium has been extremely proactive in reacting to COVID-19 to mitigate against the potential financial fall-out that the pandemic wreaks. Can you describe those measures and also what you have observed in China in terms of the recovery phase?

HOONG: Firstly, FEC has worked diligently, as a company to protect our balance sheet with strategies to neutralize the worst effects of a pandemic. For example,
our rationalization programme up to March 2020 netted sustainable annual savings of around AUD$31 mill. The programme focussed on the reduction of overheads,
removal of incentive payments and streamlining operations. Secondly, my executive team and I are regularly in and out of China, and we don’t see a lot of major issues in the street or public spaces. People, as a whole, are going about their everyday lives. Even masks are not being worn en masse as they used to be. We have a significant hotel asset in Wuhan, a city with a population of 19 million. We recently leased out a 3,000 sq.m. seventh floor of that building to a significant Wuhan based retailer on an 18-year lease at a premium rate. This deal tells you that Wuhan is back to normal because no established, experienced business operator would enter into a long-term lease if there were to be any doubt over the business viability of its industry.

TAE: The western side of the Melbourne CBD grid was once a derelict, much-maligned part of the city. More than a decade ago, Far East Consortium acquired various
sites across the Southern Cross Railway Station intending to build, over time, around 6,000 apartments. The scale of this project is still not standard in Australia. Today, we
see the fruits of that decision with modern apartments with an exciting mixed-use retail element. What are your feelings about those early decisions and where Far East
Consortium is with the project today?

Far East
West Side Place

CHIU: Our company’s first project in Australia was in Melbourne with our project, West Side Place is one of my proudest achievements for several reasons. The challenge
of the location required that we create from nothing a brand-new destination lifestyle to a scale previously unprecedented in Melbourne. I recall some years ago speaking to your state premier at the time about our objective to build a few thousand units in one location – an undertaking considered normal in China. He responded by saying we were quite ambitious. I can say today that we achieved our first-phase target of 3000 apartments.
Our second phase will be completed in two years with a similar target. The crowning glory of our project is the Ritz Carlton hotel located on the eightieth floor. By the end of this multi-stage project, our company’s total investment will exceed HKD$11 billion. Our success has been motivated by the desirability of overseas families wanting to move to Australia and being attracted by the concept of Australian-style city living. This business model has been enormously successful, and I think Australia has benefitted by the hundreds of construction jobs created and the crucial foreign capital brought into the country.

TAE: What is your idea about Australian city-living that contrasts with the Asian experience?

Far East
Craig Grenfell Williams, Director, Fast East Consortium

CHIU: I recall a conversation two years ago with my Executive Director of our Australian development projects, Mr Craig Williams on this very topic after our first phase. We had contented residents who were enjoying outdoor parties and Aussie barbecues in temperate weather on our one-acre Australian native garden rooftop setting.

I was also told about our incredibly popular coffee shop experience within our complex. Overseas visitors savour Melbourne barista-made coffee. And like what you see
pioneered in Asia, we have integrated our supermarket, restaurants and other day-to-day services which adds to the convenience of city living.

TAE: Ultimately, how do your Australian projects perform for its purchasers?

CHIU: An investor in that project receives one of the highest rental returns in Melbourne, which underpins the long-term investment of the project. As the Chairman of
this company, I am very proud of this project.

TAE: Earlier this year, FEC formally launched its Queens Wharf project in Brisbane. With nearly 700 apartments involved, we saw a considerable uptake with the majority
of the apartments now sold. Given the scale of the project, economic commentators would have expected a project of this size would take much longer to sell-down.
How do you account for the success of your campaign?

Far East
Queen’s Wharf Brisbane

HOONG: I was personally involved with the project marketing of the project, and I can speak for the unique selling points that have made it such a successful
campaign. Firstly, Queens Wharf is located within the Brisbane CBD – it’s a central and easy-to-reach location is close to the parliament and university. Secondly, the project is designed as a significant, fully integrated resort themed development – not just a stand-alone residential tower with minimal amenities. Can you imagine the excitement of one location with three hotels, a casino and entertainment complex that is designed to our international standards? Crucially, the lead-up to the official launch was important. The project garnered a sense of tense anticipation from our domestic and international clients, so much so that two months before the actual launch date, we had
already sold 80% of the residential apartments.

Construction is now well underway and, despite COVID-19, is on schedule primarily
because the reduced city traffic congestion has worked to the project’s advantage.

TAE: Far East has enjoyed above-average returns and healthy growth, concentrating on some particular sectors for over three decades. Is there a view that other emerging
asset classes may have some attraction by your Board for future acquisition?

CHIU: This is a good question. Our focus from inception has been to be a disciplined and focussed world-class developer of major mixed-use and resort-style projects. About 80% of all our projects have a residential component. A significant income stream for the company comes from the ownership and operation of over 100,000 car parks across the Asia Pacific region of which Australia is a significant part. When one achieves success in specific sectors and desires to venture into other sectors, I am reminded about a lesson that has greatly influenced my way of thinking. When I was a young business executive
about thirty years ago, I was seated next to the CEO of Coca Cola Amatil on a flight from Japan to Hong Kong.

He said with some conviction that his company would know exactly how to set up and operate a complex manufacturing and bottling plant in Outer Mongolia.But if tasked with opening a Chinese restaurant on the ground floor of their headquarters in Atlantic City, USA, it would fail dismally. His point is about staying in business sectors where you have a competitive advantage.

Our company has pursued a “Dual-Engine” development strategy for nearly three decades. Our cash flow derives from both carefully scheduled completion of our projects and recurring incomes from the management and ownership of hotels and car parks. In all, we sustain an average gross margin over assets of around 25% to 30%, which is acceptable by industry standards. To answer your question, retirement homes have become big, profitable businesses – more so in China than in Australia. Australia’s market is quite mature yet comparatively small by China’s standards. I see potential in adopting some of Australia’s management and technology prowess to bring into China’s massive ageing population market. This observation is not an official company position but certainly one, I think personally, is worth taking into consideration.

TAE: Mr Chui, you are known to be passionate about the Chinese diaspora and the role it can play in building bridges between China and the West. This position would appear counter-intuitive in our current geopolitical situation. Can you comment on this?

CHIU: I have spent my working life in Hong Kong and I have travelled and lecture extensively around the world about China and the Chinese diaspora. If I may speak frankly to your readers. I have met and discussed China issues with many Australian leaders. Australia is one country that should not set out to be perceived to be cold and unfriendly
towards China.

Australia is geographically located in Asia and has a relatively large population of Asian residents. When I am in Australia, I meet many successful people of Chinese descent. Australia benefits from Chinese students and the businesses that their families invest in and set up there.

Far East
Admiral Zheng He (right) led the Ming’s Fleet which traversed the world on a peace mission of trade and commerce

China purchases most of Australia’s raw materials. With my life’s experience working with and in China, the Chinese mentality is entrepreneurial with a strong focus on health, family and mutual prosperity. It is not in the Chinese way of thinking to dominate and take from others. The classic example of China’s historic outreach to the world were that of the Ming China’s treasure fleet (郑和下西洋) which set out on long voyages between
1405 and 1433. Admiral Zheng He (郑和) under the tutelage of Emperor Yongle (永樂帝) completed seven expeditions around the South China Sea, the Indian ocean
and beyond and in the process, China became a world maritime power. The point of the voyages was that China sought to engage with other territories simply for mutually
beneficial trade and commerce. In my humble opinion, the same attitude and goals apply in our modern age.

Far East

Tan Sri Dato’ David Chiu Awards, Titles, Positions
and Commendations

• Member of the 12th and 13th Chinese People’s Political Consultative Conferences
• Vice-chairman of All-China Federation of Industry and Commerce in 2017
• Trustee member of The Better Hong Kong Foundation
• Honorary Chairman of Mid-Autumn Festival Celebration-People and Forces’ Committee
• Director and a member of Concerted Efforts Resource Centre, a patron of China-United States Exchange Foundation.
• Honorary Chairman of Guangdong Chamber of Foreign Investors
• Honorary Chairman of the Association of Chinese Culture of Hong Kong
• The 8th board member of Friends of Hong Kong Association
• Member of Hong Kong General Chamber of Commerce
• Member of the Constitutional Reform Synergy
• Member of The Real Estate Developers Association of Hong Kong
• Member of Pacific Basin Economic Council
• Director of three Ju Ching Chu Schools in Hong Kong
• Vice-chairman of Guangdong-Hong Kong-Macao Greater Bay Area Radio and Television Union
• In Malaysia, Tan Sri Dato’ David Chiu was awarded an honorary award which carried the title “Dato” and a more senior honorary title of “Tan Sri” by His Majesty, King of Malaysia in 1997 and 2005 respectively
• He was also awarded the WCEF Lifetime Achievement Awards by Asian Strategy & Leadership Institute in 2013

(Source: FECIL 2020 Annual Report)

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